Lucent Technologies Inc. allegedly provided its investors with false and misleading information on its financial results for the fourth quarter of this year, according to a suit filed Friday in a federal court in New Jersey.
The complaint filed in the U.S. District Court for the District of New Jersey alleges that investors were misled between Oct. 10 and Nov. 21, the period between when Lucent first reported its fourth quarter earnings and when it downgraded them. The suit also alleges that former Lucent chairman Richard McGinn was motivated to cause the Murray Hill, New Jersey company to report inflated revenue and earnings in an attempt to maintain his position in the face of escalating investor dissatisfaction, according to the complaint. The plaintiff in the case is Lucent investor Donald Press.
Lucent spokeswoman Debi Lewis confirmed that Lucent has received complaints, but said the company does not comment on pending litigation.
The complaint, which is seeking class-action status, comes after Lucent on Nov. 21 announced it had trimmed its fourth quarter revenue by US$125 million and shaved its earnings by two cents a share for the quarter ending Sept. 30, 2000. Shares of Lucent fell 16 per cent and closed at $17.56 a share on Nov. 21. At the time, Lucent said it had discovered “a revenue recognition issue.” A revenue recognition issue refers to how and when a company reports revenue, according to those familiar with the situation.
McGinn was ousted in October after Lucent failed to hits its earnings mark five quarters in a row.
In addition to Press’ suit, at least two other plaintiffs have come forward to file suit in the federal court against Lucent on the issue of the fourth quarter results. The plaintiffs include Ralph M. Stone and Jacqueline Brogin.
Shares of Lucent traded down 43 cents or 2.79 per cent to $15.25 a share in afternoon trading Monday.